Let councils have a say over pay

Socpo
claims local authorities are saddled with an outmoded system when deciding what
to pay staff. It is urging the Local Pay Commission to allow each authority to
set individual pay levels, dependent on local economic conditions. Jane Lewis
finds out whether such autonomy would work or if it would lead to chaos

A radical new approach to paying local authority staff is needed, allowing
individual councils a much greater say in how they reward their staff.

This is the view of local government HR body, the Society of Chief Personnel
Officers (Socpo), in its submission to the Local Pay Commission, which is
considering whether pay negotiations should continue to be set at a national
level.

Chancellor Gordon Brown favours devolving pay negotiations to the regions,
but Socpo has called for even greater autonomy so the 350 local authorities
affected can set salary levels individually.

Socpo vice-president Alan Warner said the real problem lies with local
authority employers being saddled with a system "dating back to the 1940s
and 1950s".

The unions, which remain vehemently opposed to local pay bargaining, argue
it will result in pay being driven down in some areas. However, Warner said the
real message is that pay levels "don’t need to be driven any higher",
with even the lowest pay in local government being set well above the minimum
wage.

Indeed, what he terms the "blunderbuss" approach to setting pay,
regardless of local economic conditions, has created some startling
disparities. In London and the South East, for instance, public sector managers
(paid an average £530 a week) trail way behind their private sector
counterparts at £780 per week. Conversely, public sector managers in the North
East are overpaid by comparison.

"What looks relevant in one area begins to look bizarre in
another," said Warner. He also maintains that the narrow slant of national
pay bargaining has detracted from the importance of other issues such as
training and development. "You can’t handle pay in isolation of the whole
employment experience, but that’s the system we’ve got now," he said.

The arguments for doing away with national pay rates have been well
rehearsed. Proponents insist that fixing public pay centrally undermines the
two critical factors that should determine reward: local market conditions and
performance.

By controlling their own budgets – and setting their own terms and
conditions – local employers could move quickly to address key skills shortages
and provide the kind of flexibility more sophisticated services that a modern
society demands.

The ‘premium’ pay rates for overtime currently enshrined in the National
Spine (which sets uniform pay rates), for example, make it prohibitively
expensive for many authorities to open libraries, school and advice services at
times when the public wants to use them.

The Socpo report’s robust tone represents a change for HR in local
government, said the body’s president Mary Mallett. "Personnel people have
shown they are very good at making policies [devised by other people] work. But
we were very keen that the HR voice was heard loud and clear on this
issue."

But how realistic is it to assume that local authorities have either the
will or the expertise to take on the responsibility for negotiating pay levels?

As Socpo points out, local authorities have always had the option of going it
alone – national pay bargaining has never been compulsory for individual
authorities – yet only a handful have chosen to do so.

Moreover, opponents argue that exposing essential services to market forces
could be a recipe for disaster, exacerbating skills shortages in poorer areas
and fanning conflict.

You need only look at the difficulties the rail industry has experienced in
terms of staff shortages and strikes since competing companies began setting
different pay rates. Not even the most aggressive private sector companies set
pay on a regional, let alone local basis, they say.

Far from aiding modernisation, the move to local determination is a
"dangerous and dated policy", said Unison general secretary Dave
Prentis.

Some critics also question local employers’ ability to handle negotiations
effectively. During the firefighters strike, for instance, even Downing Street
slammed the employers’ negotiating team as "a shamblesÉ who clearly do not
know how to put together a properly costed deal".

That kind of allegation makes Mallett really angry. For a start, she said,
the fire employers were negotiating nationally rather than locally. And critics
"are perhaps forgetting how much more sophisticated local authority HR has
become". Those who doubt it need only look at the "ingenuity"
they have repeatedly demonstrated just trying to make the National Spine work.

So what can account for the ‘painfully slow’ movement into local bargaining?

Certainly, some authorities have been opposed to reform on ideological
grounds. But many more, who would like to seize the reins, have been thwarted
either by their size (the shift would be prohibitively expensive for many
smaller district authorities) or by a system which, despite paying lip service
to the notion of greater local autonomy, is easily hijacked by the unions.

Socpo is particularly critical of Part 3 of the 1997 Single Status Agreement
– the national blueprint for negotiating terms and conditions – which the
unions have consistently used to block local variations. This led many
authorities to conclude that changing terms and conditions was simply too
difficult to attempt – a fact made all the more infuriating given that only 50
per cent of council workers are union members anyway.

Socpo remains optimistic that when the Local Pay Commission reports this
autumn, it will recommend removing these impediments. In an ideal scenario,
said Warner, organisations would be looking at a gradual, and completely
voluntary, roll-out over three to five years.

In the meantime, HR needs to get its house in order. Many local authorities
already have a good foundation in terms of excellent data on employee profiles,
job descriptions, competencies, pay rates, working arrangements and so on. Now
is the time to build on that by being absolutely clear about your authority’s
priorities and the strategies needed to achieve them.

"Make sure you’ve got all the building blocks in place so when you need
to take decisions you can make them in context," said Warner. This will
involve holding lengthy sessions with staff and unions. Bear in mind that local
union officials, accustomed to leaving negotiations to national leaders, may
need training in this area.

Realise too that while any move to local negotiation will undoubtedly be
challenging, the Socpo proposals provide for a continuing national framework to
set overall pay budgets and advise on best practice.

"We’re not saying let’s tear up national pay bargaining
altogether," said Warner. "We still need some benchmarks set out at a
national level. The emphasis should be on "setting a climate in which
people will be tempted to make the shift". What is being proposed here, is
not "dramatically radical so much as relevant", added.

Mallett, meanwhile, is "eternally optimistic that when the chips are
down, local government falls back on commonsense".

"What Socpo recommends will work. More importantly it will make sense
to the people who have to deliver," she said.

Socpo’s proposals in a nutshell

– Abolishing the National Pay Spine
("an inconsistent and outmoded product of history"), which sets out
specific salary levels for all employee groups

– An end to the specific procedures for negotiating terms and
conditions laid out in Part 3 of the 1997 Single Status Agreement

– The maintenance of a watered-down national pay body that
would set overall local authority pay awards, yet leave decisions on how
budgets are allocated to the discretion of local employers. The national body
would act as an overall framework, responsible for best practice advice

– Rejecting regional pay bargaining, which has "none of
the advantages of national standards" and many disadvantages in terms of
"constraining the ability to produce local pay strategies"

– A move away from the irrelevant low pay and gender
discussions that have dominated the local government remuneration debate